Members of the Maryland Association of Certified Public...

TAX ANSWERS

March 03, 1995

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.

Q: When selling a home and claiming the $125,000 one-time tax exclusion, is it also possible if a new residence has been purchased to use the sum of that new residence and deduct that from the sale price of the house when figuring your gain?

A: Yes, you may combine the two tax exclusion rules concerning personal residences. The first rule allows taxpayers over 55 a one-time $125,000 exclusion on the gain from the sale of a home. The second rule allows a homeowner to defer the gain on the sale of a home if a replacement house is purchased at the same or higher price. Keep in mind that after you use the one-time exclusion, you will not be able to use it again when you sell your new home in the future .

Q: When you have gambling winnings, how do you report the winnings and how do you report offsetting losses?

A: You report your gambling winnings, including lottery winnings, as "other income" on line 21 on your Form 1040. Your gambling losses are reported as an itemized deduction on Schedule A, line 28. Remember, you can only deduct losses up to the amount of winnings reported on line 21.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

To submit a question, call Sundial, The Sun's telephone information service, at (410) 783-1800. In Anne Arundel County call 268-7736, in Harford 836-5028, and in Carroll 848-0338. Using a touch-tone phone, enter 6225 after the greeting. Push 1 to submit a tax question; state the question in full. Push 2 to hear a tax tip. Selected questions will be answered in the Business section.